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Needham Tax assessor was prosecuted in Federal District Court in Boston based on the accusation on Tax Fraud that he failed to pay more than $100,000 in taxes on money he supposedly embezzled from an old woman, prosecutors said.

Needham Tax assessor, Kevin Foley, 53, who is a long time town fire fighter, was nominated to the assessor’s post, pleaded not guilty to three counts of Tax evasion “willfully attempt[ing] to evade and defeat the income tax due . . . by concealing and attempting to conceal from all proper officers of the United States of America his true and correct income.”

“I wish not to comment,” Foley said after telling the judge he was an indigent and in need of a public defender.
A public defender, on behalf of him, yesterday declined to comment.
He was released on $50,000 bail and on condition that he will not get in touch with the 77-year-old Needham inhabitant or her family from whom he is charged of stealing money.

The Assistant US Attorney Robert A. Fisher told the court that Foley has not paid his taxes for the past 20 years.
“That’s including taxes on legally earned income,” Fisher said, adding that Foley knew the old woman well.
In the accusation, the grand jury emphasized that Foley took out money from the old woman’s bank account and paid for money orders for his private use; approved checks withdrawn from her bank accounts to pay personal expenditures including his credit; relocate money from her account to his bank accounts; used her ATM card to pull out cash for his own perusal; and withdrew money from her account to acquire a cashier’s check, which he used to buy a boat for his own use.

The accusation alleges that Foley did not pay $115,552 on nearly $500,000 in revenue between June 2006 and April 2010.
Neither the elderly woman nor her family relatives could be contacted for an interview.
Needham Town Manager Kate Fitzpatrick said the town is evaluating the charges and will decide soon whether Foley should be removed from the Fire Department, which he joined in 1987.He was elected tax assessor in 2007.

“The town’s expectation is that our employees will conduct themselves to the highest moral and ethical standards, and we will act expeditiously to address illegal activity or other improper conduct,” she said in a statement.
There was no decision yesterday whether he could remain in his elected position as a tax assessor.

If found guilty, Foley could be in prison for a maximum of 15 years and be required to pay back the taxes he owes. He was planned to return to court June 16.

A number of income tax scams arise during the tax season. Since these activities are illegal, taxpayers must be aware of these tax scams and avoid using them to defraud the US government of appropriate revenues.

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These tax scams include frivolous arguments where promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the levies they owe.

The Internal Revenue Service has a list of frivolous legal positions that taxpayers must avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their liabilities in court, no one has the right to disobey the law or IRS guidance.

The IRS has also identified returns where taxpayers report non-taxable Social Security Benefits with excessive withholding. This tactic results in no income reported to the IRS on the income tax return.

Often both the withholding amount and the reported income are incorrect. Taxpayers are advised to avoid making these mistakes. Filings of this type of return may result in a $5,000 penalty.

Misuse of tax-exempt organizations is also strictly monitored by the IRS. The abuse includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property.

The IRS also continues to investigate various schemes involving the donation of non-cash assets including situations where several organizations claim the full value for both the receipt and distribution of the same non-cash contribution. Often these donations are highly over-valued or the organization receiving the donation promises that the donor can re-purchase the items later at a price set by the donor.

The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new definitions of qualified appraisals and qualified appraisers for taxpayers claiming charitable contributions.

Retirement plan arrangements – including the “Individual Retirement Arrangements” (IRA’s) – are also used to deceive the government of appropriate levies. The IRS is looking for transactions that taxpayers employ to avoid the limits on contributions to IRA’s as well as transactions that are not properly reported as early distributions.

Taxpayers must be suspicious of advisers who encourage them to shift appreciated assets at less than fair market value into IRA’s or companies owned by their IRAs to circumvent the annual contribution limits. Other variations have included the use of limited liability companies to engage in activity that is considered prohibited.

Disguised corporate ownership is also a tax scam to avoid paying the right levy to the US government. Corporations and other entities are formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity such as improperly using a third party to request another employer identification number.

Such entities can be used to facilitate under-reporting of income, fictitious deductions, non-filing of income tax returns, participating in listed transactions, money laundering, financial crimes and even terrorist-financing.

The IRS is currently working with state authorities to identify these entities and to bring the owners of these entities into compliance with the law.

Fuel tax credit scams is another method employed by taxpayer to cheat on their duties. The IRS has discovered claims for the fuel tax credit that are excessive.

Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But other individuals are claiming the tax credit for non-taxable uses of fuel when their occupations or income levels make the claim unreasonable.

Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

Every year the Internal Revenue Service (IRS) sends millions of tax letters and notices to income taxpayers. But that does not mean you need to worry. Just in case one shows up in your mailbox, here are 8 things every taxpayer should know about IRS notices.

1. Stay calm and do not panic. Many of these letters can be dealt with simply and painlessly.

2. Know that there are number of reasons the IRS tax service sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account, or request additional information. The notice you receive frequently covers a very specific issue about your account or income tax return.

3. Each letter and notice offers specific instructions on what you need to do.

4. If you receive a correction notice, you should review the communication and compare it with the data on your income tax return.

5. If you see eye to eye with the correction to your account, usually no reply is necessary unless a payment is due.

6. If you do not agree with the correction the IRS made, it is imperative that you respond as requested. Write to explain why you differ. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7. Most letters can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number found on the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call, for reference.

8. Keep copies of any communication with your income tax return records. Stay organized, you’ll never know when you’ll need these records again.

The fastest way to make the legit tax payers go angry is to inform them that almost half of U.S. taxpayers end up without paying federal income tax return.

But like most figures, it is sometimes misinterpreted — and, in the case of those annoying to stir political rage, its tainted.

For the year 2010, approximately 45% of families, or about 69 million, will end up not owing in federal income tax, based on the assessments of nonpartisan Tax Policy Center. Various taxpayers in that group will even end up of a tax refund from the federal government.

It does not mean that those families did not pay any taxes. Some are still paying other taxes such as state and local income taxes. Disbursing for payroll taxes is not that stress-free as you get to spend for Social Security and Medicare.

More than 49 million Americans pay payroll tax. Do you know that about 34 million will pay more payroll tax compared with what they get back on their tax return? The other 15 million are lucky enough to get enough tax credits and tax refund to compensate the amount they contribute.

Not paying income tax is not restricted to the poor and low income earners. According to Roberton Williams, a senior fellow at the Tax Policy Center, even those who make a lot can be in the non-payer group. How? They may be fortunate enough not to pay tax if they acquire their income from tax-exempt bonds or overseas sources for which they get foreign tax credits. This is

Additional IRS files indicate that the tax bite high income taxpayers have plummeted as their earnings have improved. Those who have zero income tax burdens or less have increased in numbers in the previous years.

Why is that?

The worsening economy has decreased many incomes. Because of that, the government passed many tax breaks to alleviate the financial discomfort has reduced the tax bills.

Also, the tax code provides numerous tax breaks to stimulate commercial activities and other profitable endeavors. One good example is the education tax credit which inspires taxpayers to send their children to school.

The Obama tax cut as well as the provisional tax strategies have also amplified the numbers of non-tax payers.

Do you know that anybody can free file? Now, you can do and e-file your income tax returns for free. Just relax and let Free File do all the tough work for you with brand-name software or online Fillable Forms. Even if you want to request for an extension to file, you can use Free File to e-file Form 4868. All of these are accessible through the IRS.

But how do we do about Free File?

First of all, get organized and prepared. Collect all necessary documents such as copy of last year’s tax return and your W-2s, 1099s, etc. Check your last year’s income tax return for a rapid approximation of your adjusted gross income (AGI). Read and analyse the Free File FAQ sheet and the Free File Fillable Form FAQ for more info about these services.

Then, choose the Free File option you want. You can use the Free File Software if your AGI is $58,000 or less. You can also use the Free File Fillable Form which is an electronic version tax forms intended for those who wants to do their own income tax returns.

This coming Monday, April 18, will be the deadline for filing income tax. So consider this: The Rich will have to pay lesser tax than they did twenty years ago. Plus, almost half of the US households has zero income tax and will receive a tax refund.

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The Internal Revenue Service (IRS) trailed the income tax returns with the 400 highest adjusted gross incomes each year. The average income was nearly $345 million on those returns in 2007, based on IRS data. The average federal income tax rate was 17 percent, down from 26 percent in 1992. During those years, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent.

The highest income tax rate is 35 percent. So, how did the rich avoided these taxes?

Our government created so many tax breaks for all types of people at every income level. There are tax breaks for raising and having kids, paying for a house or car, having an education, and even for paying other taxes. Because of these numerous and varied tax breaks, it is approximated that about 45 percent of U.S. households will pay no federal income tax for 2010. This is according to estimates by the Tax Policy Center, a Washington think tank.

According to the study done by the National Taxpayer Advocate, an autonomous watchdog within the IRS, the tax code is filled with about $1.1 trillion in credits, deductions and exemptions, with an average of about $8,000 per taxpayer.

Because of these many tax credits and exemptions, both Democrats and Republicans desire for the tax laws to be revamped. The Republicans want to get rid of tax breaks to pay for lower overall rates. Whereas, the Republicans want to have a more competent tax code which can augment economic activity but are against to increasing taxes.

Last week, President Obama announced that he wants to remove the tax breaks to lower the rates and to reduce government borrowing.

The Congress has abolished a tax scheme that will force small businesses in doing tons of paperwork and requires them additional cost for the accounting service for their extra work.

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The law was approved last year to look for funds for the health care bill. It requires all businesses to file extra forms for having business with other business worth more than $600 dollars in a year. Imagine the number of paper for every contractor and every worker you hire to help in your business.

Business owners and advocates are happy about the repeal, which rallied to Congress and the White House for the withdrawal of the support which President Obama has initially implemented.

“This would have been an administrative nightmare for small business,” said Scott Hauge, a small-business advocate who runs an insurance brokerage in San Francisco. Had it gone into effect as planned next year, Hauge’s firm would have had to process 700 of the forms, up from 25 that he has to file currently, he said.

Hauge said he had never seen an issue galvanize the small-business community as quickly or as powerfully as this.

The Obama administration anticipates that the new tax scheme’s extra form-filling will be able to help the IRS locate those person or company that are not paying enough taxes. This scheme would help collect about $17 billion in 10 years in order to fund the huge overhaul of the present health care.

However, small-business owners instantly overreacted. They proposed that the measure was unwieldy and unfair. It would have required businesses to send a tax form known as a 1099 to vendors, retailers, utility companies and any other entity they’d contracted with. They also would have had to file a copy of the form with the IRS.

By contrast, the law had previously only required that such forms be filed for freelance workers and others who had been hired as independent contractors.

Because of the clamor, the Obama administration reversed course and agreed to support the repeal. Obama spokesman Jay Carney suggested that the President would approve the bill when it reaches his office.

“We are open to working with Republicans and Democrats to look for funds for the health reform law, and we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses,” Carney said in a news release Tuesday. “Small businesses are the engine of our economy, and eliminating the 1099 reporting requirement is the right thing to do.”

Joseph Czyzyk, the chairman of the Los Angeles Area Chamber of Commerce, said he hopes the abolish means that Congress and the administration will restrain its effort on the business community and focus in its efforts to look for tax evaders.

“They’re looking in every mouse-hole to see where people may be cheating on taxes, as if that’s the way to increase revenue in this country,” Czyzyk said. “The Chamber is very glad both the House and the Senate saw eye to eye and did the right sensible thing.”

The measure to repeal the tax provision was authored and sponsored by Rep. Dan Lungren (R-Gold River). The Senate passed it Tuesday on a bipartisan vote of 87 to 12 after promoters said they had found an alternative way to pay for the lost tax revenue.

The Internal Revenue Service(IRS) offers 10 tips for taxpayers still working on their income tax returns:

1. File electronically. IRS e-file: It’s safe. It’s easy. It’s time. IRS efile is now the norm, not the exception. The number of e-filed Form 1040 tax returns is approaching 1 billion for more than 20 years of filing online. In 2010, 99 million people – 70 percent of all individual taxpayers – used IRS e-file to electronically transmit their income tax returns to the IRS.

2.Make sure the identification numbers are correct. Carefully check identification numbers – usually Social Security numbers – for each person listed. This includes you, your spouse, dependents, and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect, or illegible Social Security numbers can delay or reduce a tax refund.

3. Double-check your figures. If you’re filing a paper return, you should double-check that you have correctly figured the refund or balance due.

4. Check the tax tables. If you’re filing using the Free File Fillable Forms or a paper return, double-check that you have used the right figure from the tax table.

5. Sign your form. You must sign and date your return. Both spouses must sign a joint return, even if they had only one income. Anyone paid to prepare a return must also sign it.

6. Mailing your return. If you’re mailing a return, find the correct mailing address at www.irs.gov. Click the Individuals tab and the “Where to File” link under IRS Resources on the left side.

7. Mailing a payment. People sending a payment should make the check payable to “United States Treasury” and should enclose it with, but not attach it to, the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the Social Security number of the person listed first on the return, daytime phone number, the tax year, and the type of form filed.

8. Electronic payments. Electronic payment options are convenient and safe methods for paying taxes. You can authorize an electronic funds withdrawal or use a credit or a debit card. For more information, visit www.irs.gov.

9. Extension to file. By the April 18 due date, you should either file a return or request an extension of time to file. Remember, the extension of time to file isn’t an extension of time to pay.

10. IRS.gov. Forms, publications, and information on tax subjects are available at www.irs.gov